Orange County Short Sales and Bank-Owned Homes

Orange County CondosA lot of folks ask me about the foreclosure market and the inventory of bank-owned homes.  I decided to look into the numbers and create a chart showing the market data for both types of homes. I went back 18 months and charted the data for 1) bank-owned homes and 2) homes that are selling “short” and are in the foreclosure process.

Click here to see the data for the past 18 months for all bank-owned residential properties in Orange County.

Click here to see the data for the past 18 months for all Orange County residential properties in the short sale or pre-foreclosure process or have a notice of default.

There has been a dramatic drop in both types of inventory.  Buyers have been most eager to take advantage of this type of property listing. Is the drop just because banks are holding off foreclosing? Truly doubtful. Not for this kind of drop. As we get further away from 2007-2008, the fewer homes we will see going into foreclosure and an increasing amount of buyers gobbling up the inventory, especially investors. You can see in both cases, there are more homes in escrow than are available for sale. There are simply not enough of this type of property for sale. Demand is high as first-time buyers and investors see the wisdom in making a purchase right now as rental rates continue to rise.

If you want to see what types of bank-owned homes or short sales may be available, call me today! 949.525.5905

Time to Get Serious If You Want to Purchase a Home Before End of the Year

Might Be Time to get Off the FenceStill on the fence? Well, I don’t like to push people or tell people what they need to do, and I am not necessarily saying that now. What I AM saying is that with inventory shrinking and likely to continue to shrink for both condos and single family homes here in South Orange County for the next several months, it will most likely be harder to find the right home if you want to close escrow before the end of the year. With a good 25% to 30% of the inventory a short sale or bank-owned, it may be even tougher to 1) find a decent home and then 2) actually close in a reasonable amount of time.

My current buyers are already experiencing difficulty finding a decent home, and in the under-$300,000 range, it is extremely difficult to nearly impossible. All buyers want the same thing: a good deal on an awesome home. When one comes on the market, several offers flood in, and it no longer is a great deal. For buyers out there on their own and not working with a realtor, they will miss out on the deals because they are not made aware of them in time.  On a short sale, the agent may not return their call at all. It is hard work out there right now and a buyer needs a hard-working agent on their side, searching all the homes, sifting through them, separating the good from the bad and then getting an offer accepted. Just ask my buyers! One may have to write several (meaning 5 to 12) before one actually gets accepted and you actually close escrow, especially in the under $500,000 category.

So if you need to close escrow or would like to close before the end of the year, it would be very wise of you to begin the search right now! Call or email me, and I will be happy to send you a list of available properties that meet your criteria. 949.525.5905.

Victory for California Homeowners Who Have Had to Short Sell Their Home

Gov. signs SB 458 into law  –

CALIFORNIA ASSOCIATION OF REALTORS® applauds Gov. Brown on signing SB 458 into law

LOS ANGELES (July 15) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds Gov. Jerry Brown on signing SB 458 (Corbett) into law. SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.

“The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference,” said C.A.R. President Beth L. Peerce. “SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lienholders – those in first position and in junior positions – will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property.”

SB 458 contains an urgency clause making it effective upon signing.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with nearly 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Short Sale Confusion

There are numerous things to be confused about with short sales, but one thing right on top is the price the buyer sees advertised on the internet. In a regular sale, you can pretty much count on having to pay somewhere close/within a small percentage of that listed price. With a short sale, that initial list price may be just a guess on the part of the listing agent. Here is what can happen with the price of a short sale:

  1. Agent lists home for sale at $300,000 which is slightly below market value. The seller owes $400,000 on the home.
  2. After several weeks of no offers, the agent is forced to reduce the price to attract an offer to get the short sale process going and stave off the foreclosure. The price is now $265,000.
  3. The agent gets an offer for $250,000, submits it to the bank, and then months go by before a negotiator with the bank is assigned to the file.
  4. The bank gets an appraisal done that comes in at $270,000.
  5. It is discovered that there is a lien on the home for $15,000 for back HOA dues. The seller stopped paying the HOA for the last several months during the short sale process, and a law firm gets involved and puts a lien on the home.
  6. The lien of $15,000 needs to be paid off, and the bank will only agree to a purchase price of $260,000.  So the buyer needs to come up to $275,000.
  7. The buyer with the offer of $250,000 refuses to pay that amount for the home, and so the home goes back on the market at a new list price of $275,000, the amount the bank and all other parties agree to.
  8. The price of $275,000 on an approved short sale for a home worth just over $300,000 attracts several buyers, and a new buyer is chosen and escrow is opened. It could even be the case that a new buyer offers $280,000 to beat out other buyers.

This scenario is not the case with every short sale, but it happens a lot of the time. The buyer should bear in mind that there are several factors that come into play with the final sales price of a short sale property. The bottom line price comes down to what the buyer is willing to pay and what the seller (the bank in this case) and all other parties involved are willing to agree to. If no buyer will pay the bank’s price, then it will go to foreclosure. I have seen it happen that the short sale price agreed to is lower than what the home sells for as a bank-owned property and vice versa.

Have more questions? Feel free to call or email me 949.525.5905.